The Rise of 'Nudge' Advertising

Personalized ads, which deliver sophisticated, individualized mobile messages based on a user's exact location, have arrived in a big way. Does it feel like 1984 yet?

Back in December, Apple activated iBeacon, allowing it to track shoppers (with their permission) in all 254 of its retail locations in the U.S. and send them in-store notifications about upcoming deals and events.

The NFL is following Apple's lead: the same technology (via transmitters) will welcome fans at both Times Square and MetLife Stadium this weekend, The New York Times reported. Once users have downloaded the brand's app and given permission to receive alerts, the NFL can send them location based messages, including directions and nearby promotional offers.

If this seems like the future, then the future has arrived. According to the Times, these same transmitters will be installed in several hundred stores and public areas in the next few months, including at two dozen Major League Baseball stadiums and a large number of Macy’s and American Eagle Outfitters stores.

All of which, understandably, has retailers and advertising salivating.

"You have to view everything today through mobile; it's such a personal way of staying in touch with people," John Scully, former CEO of Apple Computer and Pepsi-Cola, said Thursday at a breakfast panel hosted by Zeta-Interactive, a big-data driven marketing company. "The operative word for me is really 'nudge.' You're in contact with people multiple times during the day…You're just trying to nudge them a little bit this way, nudge them a little bit that way. 'Nudge' is as powerful as anything we were doing decades ago."

The now iconic ad, with its raw emotion and unconventional narrative (there's no mention of the Macintosh until the closing voiceover, which only hints at its release) is about as far from the data-driven, information centric, targeted mobile ads of today as you can get.

"If you go back to the 1984 commercial, we were thinking: How can we stop the world?" said Sculley. "Today, it's all about engagement. There's so much clutter out there -- you run the risk of numbing the mind."

That's a real problem for advertisers, said David Sable, the global CEO of Y&R, a marketing and communications company. "We've gone into a 'Give Me One of Those' mentality." In the rush to produce the next viral clip, he believes, companies have stopped looking for new insight and meaning; instead, they simply clone what's worked before.

Hooman Radfar, the chairman and co-founder of AddThis, thinks it is: "The future is in the marriage of the two. Data, if used properly, is going to lead to insight. With big data, we have the opportunity to understand the science of feeling."

Then, in a line that could be pulled straight from Orwell's novel, he asked: "Can we figure out the way to mass engineer sentiment?"

Perhaps they can. After all, retailers and marketers have more information than ever before on consumer spending habits, and location based advertising will provide even more detailed data.

Like many companies, The Kraft Group (owners of the New England Patriots) is already aggressively collecting data on its customers, including basic information (age, sex, etc.), how they are consuming information about the team (60 percent on mobile, up from 30 percent last year) and how they respond to promotional offers.

"We need to understand who our fans are," said Jessica Gelman, vice president of customer marketing and strategy. "When we acquire fans socially, we bring them into our data base -- our warehouse -- and start watching their behavior and see what we can do."

In other words, as the company learns more about each individual consumer, it adapts its method of communication in real time, ensuring that each nudge lands more squarely.

"We're using algorithms and regression models to figure out behaviors that indicate a season ticket holder may not renew," Gelman said. "Then, we use that information to communicate with them, to touch them, to try and change their behavior."